SINGAPORE – The demand for flexible workspace is set to accelerate as over two-thirds of global corporates plan to increase their use of flexible co-working and collaborative space over the next three years, according to (Y)OUR SPACE – a new report published by Knight Frank on workspace occupier solutions.
The report surveys senior executives at 120 global companies which collectively employ over 3.5 million people worldwide and occupy an estimated 233 million sq ft of office space, equivalent to the total amount of office space in Central London.
The research shows global corporates intend to operate increasingly from flexible, serviced and co-working spaces, which create a more collaborative working environment and offer the freedom to expand and contract quickly according to market conditions.
Today, despite the proliferation of co-working and serviced office operators, most global corporates occupy office space on a traditional lease model.
Two-thirds of companies surveyed by Knight Frank reported that co-working, serviced and flexible office space comprise 5% or less of their current office space.
A small minority, less than 7%, said that flexible workspace exceeds a fifth of their total workspace.
However, Knight Frank’s research reveals that the proportion of flexible space within companies’ portfolios is set to increase dramatically.
Over two thirds, 69%, of global corporates plan to increase their utilisation of co-working spaces, and 80% expect to grow the amount of collaborative space they use over the next three years.
Furthermore, almost half, 44%, stated that flexible space would constitute up to a fifth of all office space in the next three years. An additional 16% estimated that as much as half of their workspace globally would be flexible space within the same period.
Nicholas Holt, Asia-Pacific Head of Research, Knight Frank, says, “Among some of the world’s fastest-growing economies, innovation and collaboration have led to a significant increase of co-working across key Asia Pacific office markets. Flexible workspace is on the rise, supplied not only by co-working operators but also by landlords and developers who are increasingly moving into the market directly themselves.
“While the proportion of co-working space lies roughly between 3% and 8% of prime office stock in the major markets, the growth in this sector and the continued change in working cultures across the region means that this number is likely to increase going forward.”
Drivers for the shift towards flexible workspace
Over half of companies (55%) identified increased flexibility as the primary driver of this change, with a significant proportion (11%) stating that the sense of community fostered among workers was the key benefit. A further 11% reported that the greater speed to become operational was the primary reason for selecting co-working or serviced office space ahead of more conventional office space.
An overwhelming majority of respondents, 75%, stated that personal productivity linked to wellbeing and happiness would increase as they shift towards a new flexible and collaborative model of occupancy that is more in keeping with today’s business structures and working styles.
Dr Lee Elliott, Global Head of Occupier Research at Knight Frank says, “This research underlines that a decade of global economic uncertainty has reshaped how many of the world’s largest companies view workspace.
“Shorter business planning horizons, together with the emergence of new, more agile corporate structures have driven demand for flexible space which enables companies to react to change quickly.
“While co-working and serviced office operators have grown rapidly over the past five years, driven largely by start-ups and the freelance economy, this is only the tip of the iceberg with latent demand from global companies set to emerge over the next three years.”
William Beardmore-Gray, Global Head of Occupier Services and Commercial Agency at Knight Frank says, “The demand for flexibility is the single biggest threat – and opportunity – to owners of office space. The recent boom in co-working is indicative of a structural change within commercial real estate whereby companies desire space that is flexible, highly serviced and aligned within the realities of doing business in an age of disruption. Some co-working operators have capitalised on this already, but it is imperative that owners and developers react to the new reality where the customer is king.”